Correlation Between Luckin Coffee and KSB SE

Can any of the company-specific risk be diversified away by investing in both Luckin Coffee and KSB SE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Luckin Coffee and KSB SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Luckin Coffee and KSB SE Co, you can compare the effects of market volatilities on Luckin Coffee and KSB SE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Luckin Coffee with a short position of KSB SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luckin Coffee and KSB SE.

Diversification Opportunities for Luckin Coffee and KSB SE

-0.2

Correlation Coefficient

Luckin Coffee  KSB SE

Good diversification

The 3 months correlation between Luckin and KSB is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Luckin Coffee and KSB SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSB SE and Luckin Coffee is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Luckin Coffee are associated (or correlated) with KSB SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSB SE has no effect on the direction of Luckin Coffee i.e., Luckin Coffee and KSB SE go up and down completely randomly.

Pair Corralation between Luckin Coffee and KSB SE

Assuming the 90 days trading horizon Luckin Coffee is expected to generate 4.26 times more return on investment than KSB SE. However, Luckin Coffee is 4.26 times more volatile than KSB SE Co. It trades about 0.09 of its potential returns per unit of risk. KSB SE Co is currently generating about 0.07 per unit of risk. If you would invest  2,120  in Luckin Coffee on October 26, 2024 and sell it today you would earn a total of  420.00  from holding Luckin Coffee or generate 19.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Luckin Coffee  vs.  KSB SE Co

Luckin Coffee

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Luckin Coffee are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Luckin Coffee unveiled solid returns over the last few months and may actually be approaching a breakup point.

KSB SE

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KSB SE Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, KSB SE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Luckin Coffee and KSB SE

The main advantage of trading using opposite Luckin Coffee and KSB SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luckin Coffee position performs unexpectedly, KSB SE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KSB SE will offset losses from the drop in KSB SE's long position.

The idea behind Luckin Coffee and KSB SE Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.